“Consumer Sentiment in Europe…”

France and Germany’s consumer confidence dropped more than expected this month amid inflationary pressures and the war between Russia and Ukraine, showed a survey on Tuesday.  In Germany, the Gfk institute said that its consumer sentiment index, based on a survey of around 2,000 Germans, dropped to -15.5 points heading into April from a revised -8.5 points earlier, the lowest since February, 2021.  The survey was carried out from 3 March to 14 March, after Russia attacked Ukraine on 24 February and started the largest war in Europe since World War Two.  According the Gfk, a one-point change in the indicator corresponds to a year-on-year change of 0.1% in private consumption. The ruling coalition has agreed last week on a second package of measures in as many months to give people relief from the increased costs of heating and fuel costs.  Under a EUR 17 billion package, German workers and families will receive additional public cash, a tax cut on petrol and a price cut in public transport tickets.  Meanwhile, in France, the INSEE official statistics agency said its consumer confidence index dropped to 91 points from 97 in February, representing the worst headline figure since February 2021.  Next month presidential election will be held in France. In this light, the government has put together a package of measures worth EUR 25 billion to reduce the impact of high energy prices and inflation.  However, such measures did not ease inflationary fears as households are expecting inflation to increase by 50 points to its highest since INSEE survey commenced in 1972.  Part of the French government measures entail capping increases in gas and power prices, making a one-off, anti-inflation payouts to low-income households and offered a rebate on fuel prices.  The slip in consumer confidence is not limited to France and Germany, as shown by the Eurozone sentiment which was the lowest level since the beginning of the pandemic in April and May 2020.

Eurozone Sentiment

Eurozone sentiment dropped sharply in March, showed data on Wednesday, amid Russia’s invasion on Ukraine resulting in a decline in consumer confidence and higher inflation expectations.  The European Commission’s economic sentiment index for the 19 countries that share the euro, dropped to 108.5 in March from a downwardly revised figure of 113.9 in February.  Consumer confidence was the hardest hit, dropping to -18.7 in March from -8.8 in February, while sentiment in the industry dropped to 10.4 from 14.1.  Confidence in the retail sector also suffered, dropping to 0.2 in March from 5.5 in February.  Meanwhile, the services’ sector reading improved from 12.9 to 14.4 according to data.  Consumer inflation expectations also spiralled to the highest ever value, reaching 59.8 points against 37.7 in February. Selling price expectations among manufacturers rose to a record high at 58.1 in March from 49.8 in February. 

Finance Job Moves due to Brexit

According to EY consultants on Tuesday, more than 7,000 finance jobs have moved from London to the European Union as a result of Brexit, down 400 from the total anticipated in December.  While the total is well down on the 12,500 job moves forecast by firms in 2016, when Britain voted to leave the bloc, more could follow, said EY in its latest Brexit Tracker. EY said the new local hires lined to Brexit amount to 2,900 across Europe, and 2,500 in Britain, where just over a million people work in the financial services sector.  Dublin is the most popular destination for staff relocations and new hubs, followed by Luxembourg, Frankfurt and Paris.  According to EY, Paris was the highest destination in attracting jobs from London, totalling 2,800, followed by Frankfurt at around 1,800 and Dublin with 1,200.  The transfer of assets from London to EU hubs remains around 1.3 trillion pounds, EY said, adding that Brexit staff moves are by now part of a broader view of strategic business drivers and operating models. 

Russia pledges to Reduce Attack …..

Talks on Tuesday that took place in Istanbul where Russia promised to scale down military operations around Kyiv and another city.  However, the US warned that the threat was not yet over as Ukraine proposed adopting a neutral status in a sign of progress in face-to-face negotiations.  Russian Deputy Defence Minister Alexander Fomin, told reporters on Tuesday, “A decision was made to radically, by a large margin, reduce military activity in the Kyiv and Chernihiv directions.”  No other areas were mentioned, which have seen heavy fighting such as Mariupol in the south, Sumy and Kharkiv in the east and Kherson and Mykolaiv in the south.  Under their proposals, Ukrainian negotiators, said, that Kyiv would agree not to join alliances or host bases of foreign troops, but would have security guaranteed in terms similar to “Article 5” the collective defence clause of the transatlantic NATO military alliance.  They named Israel and NATO members: Canada, Poland and Turkey as countries that may give such guarantees while Russia, the US, UK and Italy could also be involved.  Kyiv’s proposals also included that Moscow would not oppose Ukraine joining the European Union, said Russia’s lead negotiator Vladimir Medinsky.  Russia has previously opposed Ukraine joining the EU especially NATO.   

Oil

Oil prices dropped about 7% on Monday, after China’s financial hub of Shanghai launched a lockdown to curb an increase in the number of COVID-19 infections.  This raised concerns about the impact on demand.  Brent crude futures dropped by 6.8% to settle at $112.48 a barrel, while US West Texas Intermediate (WTI) crude futures dropped about 7% to settle at $7.94 to settle at $105.96 a barrel.  Volatility for crude futures has increased since Russia invaded Ukraine on 24 February. Brent gained nearly 12% last week while WTI climbed almost 9%.  Shanghai has entered a two-stage lockdown of 26 million people on Monday to curb the spread of COVID-19.   Tuesday saw oil prices dropping by 2% as talks between Russia and Ukraine progressed to end the conflict.  Brent crude settled down by 2% at $110.23 a barrel, while US West Texas Intermediate crude was down 1.6% at $104.24.  Meanwhile, on Wednesday, oil prices rose more than 2% on supply tightness and the growing prospect of new Western sanctions against Russia although talks between Moscow and Kyiv indicated some progress.  The focus turned to the tight supply after the American Petroleum Institute industry group reported crude stocks dropped by 3 million barrels in the week ended 25 March.  

US Budget Targets

A $5.79 trillion budget plan was submitted by US President Joe Biden on Monday to Congress.  It includes a record peacetime military spending and further aid for Ukraine, increased taxes for billionaires and companies and lowering of government deficits.  Biden’s budget proposal for fiscal year commencing on 1st October lays out Biden’s priorities, including promises of tax hikes targeted at wealthy and companies. This is a wish list, as the final decision will be taken by lawmakers on Capitol Hill.  Biden told reporters at the White House, “The budget I am releasing today sends a clear message to the American people about what we value; first, fiscal responsibility, second, safety and security and thirdly, … the investments need to build a better America,” Biden told reporters at the White House.  The Democratic president said that he will be calling for a higher defense spend to strengthen the US military and “forcefully respond to Putin’s aggression against Ukraine” with $1 billion in additional US support for Ukraine’s economic, humanitarian and security needs.  The document is in preparation for the 8th November election that could see his Democratic Party lose control of Congress.  Whilst addressing reporters Biden said, “making real headway cleaning up the fiscal mess I inherited” and will reduce the federal deficit by more than $1.3 trillion this year by a further reduction planned for the next decade.  He further added that “for most Americans, the last few days were very hard, stretching them to the breaking point.  But billionaires and large corporations got richer than ever.”

Malta:  Unemployment Rate – February 2022

A press release dated 28th March 2022, shows that in February 2022, the monthly unemployment rate was 3.1%, with the unemployment rate for males at 3.2% while the rate for females stood at 3%.  During February 2022 the youth unemployment rate (aged 15 to 24 years) was 10.5%, while the rate for those between 25 and 74 years stood at 2.3%.

Antonella Mercieca

Customer Relationship Manager

Source:

Reuters, https://nso.gov.mt

Date:

April 1st, 2022


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